A trend line is a fundamental tool in technical analysis used to identify and visualize the direction of a stock’s price movement. It is a straight line drawn on a chart that connects at least two or more price points, typically the highs or lows, to highlight the prevailing trend in the market.

There are two main types of trend lines: upward (uptrend) and downward (downtrend). An upward trend line is drawn by connecting the successive higher lows in a rising market, indicating that demand is greater than supply, and prices are likely to continue increasing. Conversely, a downward trend line connects successive lower highs in a declining market, signaling that supply exceeds demand, and prices are likely to keep falling.

Trend lines are used in stock analysis to identify support and resistance levels. A support trend line is drawn under the price, acting as a floor that the price tends to bounce off during a downtrend. A resistance trend line is drawn above the price, acting as a ceiling that the price struggles to break during an uptrend.

Traders use trend lines to make informed decisions about when to enter or exit trades, as a break of the trend line may signal a potential reversal or acceleration of the trend.

A trend line is a straight line drawn on a stock chart to connect two or more significant price points, typically highs or lows, to illustrate the direction of the market. In an uptrend, a trend line connects rising lows, showing support, while in a downtrend, it connects falling highs, showing resistance. Traders use trend lines to identify the overall market direction, anticipate potential reversals, and time entries or exits. They help determine key support and resistance levels, making it easier to manage risk. Breaks of trend lines can signal trend changes or acceleration in price movement. By combining trend lines with other analysis tools, investors gain a clearer view of price behavior and can make more informed trading decisions.